Firms falter in plans to issue shares

Listed companies on the two national stock exchanges have completed only 48 per cent of additional share issues targeted for this year, although 81 per cent of planned stock splits have been carried out, according to a report from Saigon Securities Inc (SSI).

As of August 31, companies had issued over a billion shares, or 81 per cent of a 1.28 billion to be issued this year through stock splits, which include offering bonus shares to existing shareholders and paying dividends in the form of shares.

"If existing shareholders refuse to buy additional shares, they face a risk of dilution as share prices will be adjusted downward in proportion to the value of the issue," SSI director of analysis Hoang Viet Phuong wrote in a statement.

Listed companies (Not including banks) have also targeted to raise nearly VND19.4 trillion (US$993.7 million) this year through the issue of additional shares.They have so far raised over VND9.3 trillion ($476.9 million) on the two national stock exchanges, or 48 per cent of the goal.

Firms have also succeeded in issuing VND1.93 trillion ($99 million) worth of convertible bonds, or 25 per cent of the targeted VND7.7 trillion ($395.5 million) for the year.

These figures do not include planned initial public offerings (IPOs) on the over-the-counter market. PetroVietnam Gas, for instance, expects to raise $150 million in its IPO next month.

Seven listed commercial banks, meanwhile, have projected to raise VND17 trillion ($871.8 million) in the sale of additional shares and VND1.5 trillion ($76.9 million) in the sale of convertible bonds.

The total capital which companies hope to raise this year accounts for just 4.4 per cent of total market capitalisation on the two stock exchanges and was expected to be absorbed in part by indirect foreign investment inflows which have already totalled $1.8 billion in the first half this year.

Phuong, however, doubted whether remaining targets could be met before the end of the year under the current circumstances on the market. Stockholders were also voicing increased concerns over how effectively companies would utilise amounts raised and the impact of aggressive share issues on corporate growth and the national economy overall, he said.